Randy Cray column: Location quotients help explain economy

Randy Cray

What makes north central Wisconsin economy unique? One way to answer the question is to look at the region's location quotients, or LQ. LQs are used by economist to quantify industrial concentration. LQs allow economists to better understand the structure of an economy, and identify the industries that drive the local economy. An LQ greater than 1.0 means a region is more specialized in an activity than the nation. The greater the LQ, the greater is the industrial concentration of that activity in a region. The industries listed below are some of the region's areas of specialization. These industries serve as the foundation of the regional economy.

According to the Bureau of Labor Statistics in 2012, the largest difference in the employment pattern between north central Wisconsin and the nation overall, is in wood products manufacturing. This activity has an LQ of 8.78. Meaning employment in the wood products industry is 8.78 more concentrated here, than it is at the national level. Paper manufacturing has a LQ of 6.83. The heavy presence of these two industries helps define our local economy and make it unique.

These are far from the only industries that shape the region. Truck transportation has a LQ of 3.23, animal production is 2.76, fabricated metal products 2.73, crop production 2.6, machinery manufacturing 2.15, insurance carries 2.13, and forestry and logging 2.04. All of these industries are much more heavily represented here than in the nation as a whole.